johnsone/initiation · Datasets at Hugging Face

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For Periods Ending 12/31/22
JOHNSON & JOHNSON % $ Mix % $ Mix % $ Mix
L4W L13W L52W L4W L13W L52W
KVUE
Acid Relief 2.8% 2.9% 2.6% 8.7% 8.5% 6.3%
Allergy 9.3% 9.9% 10.9% 11.2% 12.3% 6.7%
Antibiotic 2.1% 2.2% 2.4% 10.6% 11.1% 9.1%
Anti-Diarrhea 2.4% 2.4% 2.2% 11.0% 10.8% 7.8%
Antiseptic 0.0% 0.0% 0.0% 72.0% 68.1% 55.7%
Baby Bath 2.9% 3.1% 3.3% 10.5% 11.5% 12.8%
Baby Lotion 0.7% 0.7% 0.8% 9.1% 10.8% 11.2%
Baby Oil 0.5% 0.5% 0.6% 10.8% 11.0% 9.8%
Baby Powder 0.4% 0.4% 0.5% 13.8% 15.0% 14.3%
Baby Soap 0.9% 1.0% 1.1% 6.3% 11.7% 16.4%
Bandages 4.1% 4.3% 4.5% 11.0% 10.9% 7.3%
Body Wash 2.3% 2.3% 2.3% 5.5% 7.7% 4.3%
Body Lotion 3.8% 3.5% 3.2% 5.9% 7.0% 5.9%
Cold & Flu 2.6% 2.1% 1.2% 36.1% 61.3% 19.2%
Digestive Aid 0.7% 0.7% 0.6% 9.5% 7.4% 5.3%
Facial Skin Care 10.1% 10.4% 10.6% 10.8% 14.0% 10.8%
Mouthwash 9.1% 9.5% 9.3% 9.1% 9.2% 5.3%
Pain Relief 20.1% 18.7% 16.3% 5.2% 14.8% 4.3%
Sun Care 6.5% 4.5% 3.8% -2.4% -5.6% -3.6%
Weighted Total 81.3% 79.1% 76.4% 8.5% 12.3% 6.8%
YOY EQ Price Change (%)
Source: NielsenIQ, J.P. Morgan
This document is being provided for the exclusive use of DAVID WANG at MARLOWE PARTNERS LP.
89
Andrea Teixeira, CFA AC
(1-212) 622-6735
andrea.f.teixeira@jpmorgan.com
North America Equity Research
29 May 2023 J P M O R G A N
Figure 151: KVUE Pricing Change by Key Categories - U.S. (Prior Year)
Change in Pricing in Latest 4, 13 & 52-Weeks
For Periods Ending 5/7/22
JOHNSON & JOHNSON % $ Mix % $ Mix % $ Mix
L4W L13W L52W L4W L13W L52W
KVUE
Acid Relief 2.5% 2.5% 2.7% 1.6% 1.2% -0.4%
Allergy 13.6% 12.4% 10.9% 0.4% 1.4% 2.2%
Antibiotic 2.4% 2.4% 2.6% 7.4% 3.6% 0.1%
Anti-Diarrhea 2.0% 2.0% 2.1% 5.1% 4.6% 2.7%
Antiseptic 0.0% 0.0% 0.0% 52.3% 27.4% 5.4%
Baby Bath 3.3% 3.6% 3.6% 7.1% 10.4% 11.0%
Baby Lotion 0.8% 0.9% 0.9% 8.7% 8.7% 8.1%
Baby Oil 0.6% 0.6% 0.6% 7.6% 8.4% 7.7%
Baby Powder 0.5% 0.5% 0.5% 12.9% 14.6% 10.1%
Baby Soap 1.1% 1.1% 1.2% 14.4% 19.0% 11.9%
Bandages 4.2% 4.2% 4.5% 5.1% 3.4% 2.7%
Body Wash 2.2% 2.3% 2.4% 2.6% 2.1% 0.4%
Body Lotion 3.0% 3.3% 3.2% 6.6% 5.2% 9.8%
Cold & Flu 0.8% 0.8% 0.8% 12.4% -2.7% -8.0%
Digestive Aid 0.5% 0.6% 0.6% 0.9% 2.6% 2.9%
Facial Skin Care 10.1% 11.1% 11.5% 4.0% 3.4% 1.3%
Mouthwash 8.7% 9.3% 9.7% 1.6% 2.4% 6.3%
Pain Relief 15.3% 15.2% 14.7% -2.8% -5.1% 6.7%
Sun Care 6.2% 4.4% 4.1% 2.5% 8.4% 12.6%
Weighted Total 77.8% 77.1% 76.5% 2.3% 2.2% 4.8%
YOY EQ Price Change (%)
Source: NielsenIQ, J.P. Morgan
This document is being provided for the exclusive use of DAVID WANG at MARLOWE PARTNERS LP.
90
Andrea Teixeira, CFA AC
(1-212) 622-6735
andrea.f.teixeira@jpmorgan.com
North America Equity Research
29 May 2023 J PMORGAN
Investment Thesis, Valuation and Risks
Kenvue (Overweight; Price Target: $29.00)
Investment Thesis
We rate Kenvue (KVUE) Overweight. As the largest pure-play consumer health company
in the world, reaching 1.2 billion consumers daily, KVUE benefits from participating in
large categories where reliability and performance matter for consumers. As such, we highlight five KVUE attributes that underpin our positive view: (1) resilient top-line growth
expected, (2) room for margin expansion, (3) high cash flow conversion and shareholder-
friendly capital allocation, (4) management has a strong background not only with JNJ but with other blue-chip CPGs with solid relationships with key customers, and (5) attractive valuation.
Valuation
Despite the strong share performance since the IPO, we view current valuation as attractive.
Our Dec 2023 target price of $29 is based on a blended average of EV/EBITDA (based on
blended average of HLN, Consumer Health, HPC & Beauty peers) and a DCF based on
perpetual growth method. We assign a 70% weighting to EV/EBITDA as the primary
valuation method embedding 15.1.x EV/EBITDA off our 2024E EBITDA estimate of
$4.0B (implies $27 per share) and 30% weighting to DCF as the secondary valuation method
embedding $32 per share. KVUE currently trades at 15.5x our 2023E EBITDA and was
priced at the IPO at 13.3x our 2023E EBITDA. Risks to Rating and Price Target
We believe the key risks to our OW rating and price target for Kenvue are (1) execution risk
tied to the separation from JNJ, (2) potential talc litigation outside North America, (3)
seasonality of cold & flu and allergy medicines, (4) inflation and supply chain volatility, (5)
risk of trade-down to private label due to deteriorating macroeconomic outlook or pricing
actions (elasticity), and (5) share overhang from JNJ announced intention to de-consolidate KVUE, which may include a spin-off or split-off KVUE shares, leading to potential short-
term excess supply of shares.
This document is being provided for the exclusive use of DAVID WANG at MARLOWE PARTNERS LP.
91
Andrea Teixeira, CFA AC
(1-212) 622-6735
andrea.f.teixeira@jpmorgan.com
North America Equity Research
29 May 2023 J PMORGAN
Kenvue: Summary of Financials
Income Statement - Annual FY21A FY22A FY23E FY24E FY25E

For Periods Ending 12/31/22

JOHNSON & JOHNSON % $ Mix % $ Mix % $ Mix

L4W L13W L52W L4W L13W L52W

KVUE

Acid Relief 2.8% 2.9% 2.6% 8.7% 8.5% 6.3%

Allergy 9.3% 9.9% 10.9% 11.2% 12.3% 6.7%

Antibiotic 2.1% 2.2% 2.4% 10.6% 11.1% 9.1%

Anti-Diarrhea 2.4% 2.4% 2.2% 11.0% 10.8% 7.8%

Antiseptic 0.0% 0.0% 0.0% 72.0% 68.1% 55.7%

Baby Bath 2.9% 3.1% 3.3% 10.5% 11.5% 12.8%

Baby Lotion 0.7% 0.7% 0.8% 9.1% 10.8% 11.2%

Baby Oil 0.5% 0.5% 0.6% 10.8% 11.0% 9.8%

Baby Powder 0.4% 0.4% 0.5% 13.8% 15.0% 14.3%

Baby Soap 0.9% 1.0% 1.1% 6.3% 11.7% 16.4%

Bandages 4.1% 4.3% 4.5% 11.0% 10.9% 7.3%

Body Wash 2.3% 2.3% 2.3% 5.5% 7.7% 4.3%

Body Lotion 3.8% 3.5% 3.2% 5.9% 7.0% 5.9%

Cold & Flu 2.6% 2.1% 1.2% 36.1% 61.3% 19.2%

Digestive Aid 0.7% 0.7% 0.6% 9.5% 7.4% 5.3%

Facial Skin Care 10.1% 10.4% 10.6% 10.8% 14.0% 10.8%

Mouthwash 9.1% 9.5% 9.3% 9.1% 9.2% 5.3%

Pain Relief 20.1% 18.7% 16.3% 5.2% 14.8% 4.3%

Sun Care 6.5% 4.5% 3.8% -2.4% -5.6% -3.6%

Weighted Total 81.3% 79.1% 76.4% 8.5% 12.3% 6.8%

YOY EQ Price Change (%)

Source: NielsenIQ, J.P. Morgan

This document is being provided for the exclusive use of DAVID WANG at MARLOWE PARTNERS LP.

89

Andrea Teixeira, CFA AC

(1-212) 622-6735

andrea.f.teixeira@jpmorgan.com

North America Equity Research

29 May 2023 J P M O R G A N

Figure 151: KVUE Pricing Change by Key Categories - U.S. (Prior Year)

Change in Pricing in Latest 4, 13 & 52-Weeks

For Periods Ending 5/7/22

JOHNSON & JOHNSON % $ Mix % $ Mix % $ Mix

L4W L13W L52W L4W L13W L52W

KVUE

Acid Relief 2.5% 2.5% 2.7% 1.6% 1.2% -0.4%

Allergy 13.6% 12.4% 10.9% 0.4% 1.4% 2.2%

Antibiotic 2.4% 2.4% 2.6% 7.4% 3.6% 0.1%

Anti-Diarrhea 2.0% 2.0% 2.1% 5.1% 4.6% 2.7%

Antiseptic 0.0% 0.0% 0.0% 52.3% 27.4% 5.4%

Baby Bath 3.3% 3.6% 3.6% 7.1% 10.4% 11.0%

Baby Lotion 0.8% 0.9% 0.9% 8.7% 8.7% 8.1%

Baby Oil 0.6% 0.6% 0.6% 7.6% 8.4% 7.7%

Baby Powder 0.5% 0.5% 0.5% 12.9% 14.6% 10.1%

Baby Soap 1.1% 1.1% 1.2% 14.4% 19.0% 11.9%

Bandages 4.2% 4.2% 4.5% 5.1% 3.4% 2.7%

Body Wash 2.2% 2.3% 2.4% 2.6% 2.1% 0.4%

Body Lotion 3.0% 3.3% 3.2% 6.6% 5.2% 9.8%

Cold & Flu 0.8% 0.8% 0.8% 12.4% -2.7% -8.0%

Digestive Aid 0.5% 0.6% 0.6% 0.9% 2.6% 2.9%

Facial Skin Care 10.1% 11.1% 11.5% 4.0% 3.4% 1.3%

Mouthwash 8.7% 9.3% 9.7% 1.6% 2.4% 6.3%

Pain Relief 15.3% 15.2% 14.7% -2.8% -5.1% 6.7%

Sun Care 6.2% 4.4% 4.1% 2.5% 8.4% 12.6%

Weighted Total 77.8% 77.1% 76.5% 2.3% 2.2% 4.8%

YOY EQ Price Change (%)

Source: NielsenIQ, J.P. Morgan

This document is being provided for the exclusive use of DAVID WANG at MARLOWE PARTNERS LP.

90

Andrea Teixeira, CFA AC

(1-212) 622-6735

andrea.f.teixeira@jpmorgan.com

North America Equity Research

29 May 2023 J PMORGAN

Investment Thesis, Valuation and Risks

Kenvue (Overweight; Price Target: $29.00)

Investment Thesis

We rate Kenvue (KVUE) Overweight. As the largest pure-play consumer health company

in the world, reaching 1.2 billion consumers daily, KVUE benefits from participating in

large categories where reliability and performance matter for consumers. As such, we highlight five KVUE attributes that underpin our positive view: (1) resilient top-line growth

expected, (2) room for margin expansion, (3) high cash flow conversion and shareholder-

friendly capital allocation, (4) management has a strong background not only with JNJ but with other blue-chip CPGs with solid relationships with key customers, and (5) attractive valuation.

Valuation

Despite the strong share performance since the IPO, we view current valuation as attractive.

Our Dec 2023 target price of $29 is based on a blended average of EV/EBITDA (based on

blended average of HLN, Consumer Health, HPC & Beauty peers) and a DCF based on

perpetual growth method. We assign a 70% weighting to EV/EBITDA as the primary

valuation method embedding 15.1.x EV/EBITDA off our 2024E EBITDA estimate of

$4.0B (implies $27 per share) and 30% weighting to DCF as the secondary valuation method

embedding $32 per share. KVUE currently trades at 15.5x our 2023E EBITDA and was

priced at the IPO at 13.3x our 2023E EBITDA. Risks to Rating and Price Target

We believe the key risks to our OW rating and price target for Kenvue are (1) execution risk

tied to the separation from JNJ, (2) potential talc litigation outside North America, (3)

seasonality of cold & flu and allergy medicines, (4) inflation and supply chain volatility, (5)

risk of trade-down to private label due to deteriorating macroeconomic outlook or pricing

actions (elasticity), and (5) share overhang from JNJ announced intention to de-consolidate KVUE, which may include a spin-off or split-off KVUE shares, leading to potential short-

term excess supply of shares.

This document is being provided for the exclusive use of DAVID WANG at MARLOWE PARTNERS LP.

91

Andrea Teixeira, CFA AC

(1-212) 622-6735

andrea.f.teixeira@jpmorgan.com

North America Equity Research

29 May 2023 J PMORGAN

Kenvue: Summary of Financials

Income Statement - Annual FY21A FY22A FY23E FY24E FY25E